Broadcom (AVGO) shares edged higher in Tuesday's premarket session, riding a wave of optimism in semiconductor and AI stocks. The stock gained nearly 1% as Nasdaq futures ticked up 0.23% and S&P 500 futures rose 0.11%. The move came after Jefferies stepped in with a fresh vote of confidence, arguing that the recent pullback has created an attractive entry point for investors.

Jefferies reiterated its Buy rating and $550 price target on Broadcom, pointing to improving visibility into the company's custom AI chip business. The firm sees steady progress on Broadcom's TPU roadmap and an expanding customer base. Specifically, Jefferies expects Broadcom's TPU 8i to enter production in the third quarter of 2026.

But the real headline-grabber is the long-term agreement with Alphabet's Google (GOOGL). Jefferies highlighted that the deal covers future TPU generations through 2031, includes minimum revenue commitments, and could generate more than $500 billion over time. That's not a typo — half a trillion dollars. It underscores just how central Broadcom has become to Google's AI infrastructure.

And it's not just Google. Jefferies also flagged Broadcom's first AI processor for OpenAI, code-named Jalapeno. According to the firm, the chip could deliver about 50% lower costs and 40% lower power consumption than NVIDIA's Blackwell platform. If those numbers hold up, Broadcom could become a serious alternative for hyperscalers looking to diversify away from NVIDIA's dominant ecosystem.

The Technical Picture: Mixed but Not Broken

Broadcom was trading at $375.33 in premarket, about 6% below its 20-day simple moving average of $399.98 and 8.6% below its 50-day SMA of $411.44. Those levels suggest near-term weakness is still in play. However, the stock remains 1.2% above its 100-day SMA of $371.45 and 4.1% above its 200-day SMA of $361.33. That tells you longer-term buyers are still defending the broader uptrend.

Momentum indicators are cautious. The moving average convergence divergence (MACD) is below its signal line, and the histogram is negative — a sign that bullish momentum has faded for now. The moving averages themselves tell a mixed story: the 20-day SMA is below the 50-day SMA, a bearish short-term signal. But the 50-day SMA remains above the 200-day SMA following April's golden cross, preserving the longer-term bullish structure.

Broadcom is still well above its 52-week low of $262.66, though it's below its June high of $495. The current pullback looks more like a consolidation than a full trend reversal. Traders are watching resistance near $414.50 (close to the 50-day SMA) and support around $370.50 (near the 100-day SMA).

Analysts Are Bullish Ahead of Earnings

Broadcom is expected to report earnings around Sept. 3. Wall Street is looking for earnings of $3.16 per share on revenue of $29.44 billion, compared with $1.69 per share and $15.95 billion a year earlier. That's nearly double the earnings and revenue — a reflection of the AI boom.

The stock carries a consensus Buy rating with an average price target of $513.68. Recent analyst actions include UBS lowering its target to $485 but maintaining Buy, while Bank of America Securities and Mizuho both raised their targets to $530 with bullish ratings.

On MarketDash's quality and momentum scores, Broadcom scores a 95.71 and 74.22, respectively. Its value score is low at 7.25, which makes sense given the premium valuation. Broadcom is also a top holding in several tech ETFs, including the First Trust NASDAQ Cybersecurity ETF (CIBR), the iShares Expanded Tech Sector ETF (IGM), and the First Trust NASDAQ Technology Dividend Index Fund (TDIV).

As of Tuesday premarket, Broadcom shares were up 0.77% at $375.33.